AUSTIN — Agriculture commissioner candidate Sid Miller invested nearly $100,000 of campaign funds in the stock market, then took personal ownership of some of the stocks when he left the Texas House to settle loans he’d made to his campaign.

Miller didn’t record the transfers in his final campaign finance reports after leaving office in early 2013. He said he followed state law and Texas Ethics Commission guidelines.

The commission has acknowledged it is investigating a complaint about how Miller repaid himself with the campaign funds. Once out of office, politicians may disburse leftover money to other candidates, charities and others.

Miller, a Republican who represented a Stephenville-based district, said most of his contributors would applaud the use of the free market to grow his campaign’s finances.

“It’s kind of a free-market entrepreneurial capitalist thing,” he said.

His foray in the stock market flashes light on a rare practice in campaign finance, where donated money can be gambled in complex markets and shuffled around with little policing.

Craig McDonald, director of Texans for Public Justice, a campaign finance watchdog group, said Miller’s stock maneuvers, and the practice of buying stock using campaign funds in general, raises ethical concerns. For one, the complexity of the stock market can shroud transparency.

“He’s hidden this transaction so deeply in the mud,” McDonald said. “How can you ever track this if he doesn’t record it step by step?”

McDonald also raised concerns over the value of the stock growing for Miller and not the campaign fund.

Miller strongly denied any profiting from the transaction. He said he still has some of the stocks, but they “aren’t worth much.” He did not specify which stocks he still holds.

“Once it’s not part of the campaign, it’s my personal funds to do with as I please,” said the farmer, rancher, nurseryman and rodeo champion.

Miller conceded that the campaign could have sold the stocks and repaid the loans with the cash proceeds, but “then I’ve got to pay brokerage fees on each one of those stocks, which is money down the toilet. I would’ve had to pay taxes on some of them and that’s money down the toilet,” Miller said. “The wise, prudent financial thing to do is just apply them to the debt and just hang on to them.”

Miller is one of five Republican candidates in the March 4 primary for the agriculture commissioner job. Also running are Eric Opiela, J Allen Carnes, Tommy Merritt and Joe Cotten. On the Democratic side, Kinky Friedman, Hugh Asa Fitzsimons III and Jim Hogan are competing. Incumbent Todd Staples is leaving the post to run for lieutenant governor.

Investment

Miller’s campaign purchased stocks worth more than $97,000 in late 2008. Miller sold portions of the shares at different periods while in office and recorded the transactions in his campaign finance filings to the ethics commission.

Among the companies he invested in were American International Group and CitiGroup Inc., where the stock shares split by differing ratios.

Other shares, such as those from General Motors or Blackberry, lost all or much of their value.

When he closed out the account after losing his 2012 re-election bid in the GOP primary, Miller decided to settle debts owed to him in exchange for the stocks. Left in the balance was a $2,000 no-interest personal loan he’d given out to his campaign, and a second $10,000 loan that he gave at 10 percent annual interest — amounting to a repayment of $31,000.

“Instead of selling the shares and writing myself a check, I took the value of those shares and applied it towards my personal loan. They weren’t sold. They were transferred,” Miller said.

The Dallas Morning News originally reported on the high-interest rate for the $10,000 loan in November. The article spurred Republican activist Mark McCaig to file a complaint with the Texas Ethics Commission, which said it is examining the legality of the loan. Miller has called McCaig’s complaint frivolous and politically motivated.

Miller said McCaig was aligned with Houston trial lawyer Steve Mostyn, a prominent Democratic donor. McCaig said he’s worked with Mostyn on legal matters but has a consistent record as a Republican. He said he filed the complaint because he fears that if Miller wins the primary, ethical issues could make him vulnerable to the Democratic nominee.

The Miller House campaign’s final financial report doesn’t note any stock transfer, only about $33,000 for two loan reimbursements. It also lists reimbursement of roughly $27,000 for campaign expenses, including gas. He donated about $6,000 to his church with the remaining stock value, records show.

In total, records show the campaign’s debts paid to Miller on his final report at about $67,000. The News’ evaluation of the portfolio — accounting for the quantity Miller bought in 2008, the periodic selling of some shares and share value on Jan. 15, 2013 — shows a value of more than $70,000.

However an accurate accounting of the stock values is difficult. The price and quantity of some of Miller’s original 2008 stock purchases, as they are recorded, do not square with historical data.

Miller said the form for his final finance report didn’t have a spot to note the stock transfer.

Miller initially bought stock in more than 20 firms in one month in 2008. His finance reports show he sold some shares and credited the proceeds, about $21,000, to his campaign account in 2008 and 2012.

In one case, Miller flipped more than 29,000 shares of Texas-based Particle Drilling Technologies in less than two weeks, for a profit of more than $4,000 — almost tripling his original investment, state records show.

Several stocks paid dividends, though dividend income isn’t noted on the campaign finance reports. Miller said any dividends earned were minimal and rolled back into the accounts.

Paying taxes

Natalia Luna Ashley, interim executive director and special counsel with the ethics commission, said one major rule regarding campaign investments in the market is that no political money may be converted to personal use. In addition, “whenever political funds are retained, that information needs to be disclosed on the campaign finance report,” Ashley said.

Ashley would not comment specifically on any case, only on commission rules. The commission only considers specific issues if a complaint is filed and doesn’t police financial records without being prompted.

Taxes paid on Miller’s stock gains are not noted in campaign finance forms, either. Miller said he paid the taxes out of his own pocket, helping to simplify his reports to the state.

“It was just simple. It wasn’t that much. It was a big hassle to keep it all separated out and do a separate exemption form and throw up a red flag to the IRS probably,” Miller said.

Todd Smith, a strategist for Miller, said, in hindsight, he would have preferred Miller kept the original campaign account open and left the stocks there, so his current campaign would have a larger war chest for the current statewide race.

Follow David Barer on Twitter at @david_barer.

TIMELINE: Stock moves

November and December 2008: Rep. Sid Miller uses campaign funds to purchase more than $97,000 worth of stocks in 21 firms.

Dec. 10-11: Days after buying them, Miller sells all 29,000-plus shares of Particle Drilling Technologies for a profit of more than $4,000.

July 2009: Shares of AIG split 20:1. Miller’s 4,000 shares are reduced to 200. Miller’s 1,300 shares of General Motors become worthless when the automaker declares bankruptcy.

Jan. 2010: Shares of LTX Credence Corp. split 1:3. Miller’s 1,500 shares are reduced to 500. Miller later credits the sale of 700 shares in May 2012 to his campaign.